Monthly EMI
Principal amount
Total Interest
Total amount
Efficiently managing the repayments of a credit instrument is essential for bolstering a borrower’s credit history. Understanding the EMIs in advance plays a crucial role in ensuring timely repayment of a personal loan. To aid in this process, an online personal loan EMI calculator proves to be an invaluable tool.
Let us explore the significant aspects associated with a personal loan calculator. However, before diving into that, it is important to familiarize oneself with the concept of personal loan EMI.
What Is a Personal Loan EMI Calculator?
A personal loan EMI calculator is a tool that helps individuals determine the Equated Monthly Installments (EMIs) for their loan repayments. It takes into account three key factors that influence the EMIs:
- Principal Loan Amount (P): The EMIs are directly proportional to the loan amount. A larger loan amount results in higher monthly installments.
- Monthly Interest Rate (R): The applicable interest rate represents the percentage charged by lending institutions on the principal amount. Higher interest rates lead to increased EMIs, while lower rates have the opposite effect.
- Loan Tenure (N): This refers to the duration over which the personal loan is to be repaid. The loan tenure and EMIs have an inverse relationship. A longer tenure decreases the EMIs, whereas a shorter tenure increases them.
Read on to discover more about personal loan EMI calculators, the formula for calculating personal loan EMIs, and how to calculate EMIs for a personal loan.
How to Calculate Personal Loan EMI?
Your personal loan EMI depends on three factors – loan amount, interest rate and tenure. You can calculate your EMI obligations manually. However, the process can be extremely time-consuming. Navi Personal Loan EMI Calculator helps you calculate EMI in seconds. The online calculator is extremely simple and easy to use.
Here’s how you can calculate your personal loan EMI:
- Select the loan amount – Choose the amount you need with the help of slide bar
- Select the loan tenure – Use the slide bar to choose the loan tenure
- Select the interest rate – Move the slide bar to select the interest rate.
You will be able to view your personal loan EMI
Formula to Calculate Personal Loan EMI
The formula for calculating personal loan EMIs is as follows:
EMI = [P x R x (1+R) ^N] / [(1+R) ^ N-1]
In the above formula, the three components that constitute the Equated Monthly Installments of a personal loan are denoted by P, R, and N:
| EMI | Equated Monthly Payment |
| P | Principal amount |
| R | Rate of interest |
| N | Tenure |
Refer to the following table for a better understanding of the formula. In this example, consider a principal amount of ₹10,00,000, an annual interest rate of 10.5%, and a loan tenure of 10 years or 120 months. The formula accounts for the monthly calculation of the interest rate, given by R = Rate of Annual interest/12/100. Thus, for an interest rate of 10.5% per annum, R = 10.5/12/100 = 0.00875.
The computed EMI in this case would be ₹13,493. Therefore, a repayment of ₹13,493 for 120 months is required to settle the entire loan amount, resulting in a total payment of ₹16,19,220, including ₹6,19,220 as interest paid.
| Parameter | Value |
| Principal | ₹10,00,000 |
| Annual interest rate | 10.5% |
| Loan tenure | 10 years or 120 months |
| EMI | ₹13,493 |
Benefits of a Personal Loan EMI Calculator
Using a personal loan EMI calculator offers several advantages, as outlined below:
- Facilitates easy budgeting of EMIs: By calculating monthly installments through a personal loan EMI calculator, borrowers gain clarity on the exact amount they need to pay. This enables them to effectively manage their monthly expenses throughout the loan tenure and comfortably accommodate the EMIs in their budget.
- Informed decision-making through adjustable factors: With a personal loan EMI calculator, borrowers can experiment with different principal loan amounts, interest rates, and tenures. This empowers them to make informed decisions regarding the loan amount without compromising their financial stability and lifestyle.
- Maintains a healthy credit rating: Calculating monthly installments in advance allows individuals to manage their finances better and ensure punctual loan repayment. This helps prevent missed EMI payments and safeguards against a negative impact on their credit rating.
- Provides accurate results and saves time: A personal loan EMI calculator swiftly performs complex calculations, saving considerable time. Manual calculations can be prone to errors, but with this tool, accuracy is guaranteed.
- User-friendly and easily accessible: Online personal loan EMI calculators are readily available on various web portals and are simple to use. Users only need to input the principal loan amount, loan tenure, and interest rate to obtain the monthly installment value. This convenience allows borrowers to calculate their EMIs at any time and from anywhere.
Once you have determined your required loan amount using a personal loan EMI calculator, it is crucial to understand the detailed requirements for obtaining such funds.
Documents Required for a Personal Loan
If you are wondering about the documents needed to apply for a personal loan, here is a comprehensive list:
- KYC documents
- Salary slips from the past few months
- Employee ID card
- Bank statements of the salary account for the previous months
Please note that the above list is indicative, and additional documents may be required during the loan processing. It is advisable to contact the relevant financial institution to obtain the complete list of documents required for a personal loan.
What Are the Tax Benefits on Personal Loan?
Are you curious about the tax benefits associated with personal loans?
While personal loans are not taxable, individuals may be eligible for tax benefits if they utilize the loan amount for specific purposes. According to the Income Tax Act, 1961, tax deductions and exemptions can be claimed when the loan amount is utilized for certain purposes.
Tax deductions on personal loan interest payments can be claimed if the amount is used for business expansion expenses. However, the investment must contribute to increasing business revenue.
Under Section 24(b) of the Income Tax Act, 1961, tax rebates are applicable on personal loans used for house improvement or renovation. Individuals can claim a deduction on the interest paid for loan repayment, up to ₹30,000, from their total taxable income. If the loan amount is used for purchasing a residential house, a deduction of up to ₹2 lakh is allowed for the paid interest.
Furthermore, tax benefits can be enjoyed by utilizing the loan amount for the purchase of other assets such as gold, non-residential properties, shares, or jewelry. In such cases, the interest paid on the loan is considered part of the acquisition cost of the asset, reducing the overall capital gains and providing tax advantages for the personal loan.
Considering the significant impact that various factors can have on your repayment amount, utilizing a personal loan EMI calculator in advance is a prudent approach to effective financial management. Additionally, prospective borrowers should research multiple lending institutions and compare personal loan rates to choose the best offer available.
Frequently Asked Questions
What are the factors that affect personal loan EMI?
Your loan amount, interest rate and tenure are the three primary factors that can affect your personal loan EMI.
How to pay personal loan EMI?
Your EMI would be due on a specific date every month, for which you would be notified prior. You can link your bank account and set up auto debit so as to not miss the due date. That way every month, your EMI would be auto-debited from your bank account.
What happens if I skip my EMI?
In case you skip your EMI for any reason, your tenure would increase. However, missing EMI payments doesn’t reflect well on you and can hurt your credit score as well as creditworthiness.
What would be the EMI for a ₹1 lakh loan?
Other than your loan amount, your personal loan EMI also depends on the interest rate and tenure. Let’s say, you have taken a loan of ₹1 lakh at 10% p.a. for a tenure of 3 years. Upon calculation, your EMI would come up to ₹2,536. Use Navi Personal Loan EMI Calculator to instantly calculate your EMI.
How to reduce my personal loan interest rate?
In case you have an excellent credit score and a great repayment history, you could get preferential rates or low-interest rates from the lender.
How to reduce my personal loan EMI?
You could reduce your personal loan EMI via a personal loan balance transfer. This facility allows you to switch to a new lender under favourable terms and conditions.
What is the maximum amount of personal loan that I can apply for?
The maximum personal loan amount varies for each bank and depends on a lot of factors such as your income, liabilities, place of residence, etc. However, you must ensure that you opt for a personal loan amount where its EMI is under 30% of your salary to help you better manage your expenses.
What are the documents needed to apply for a personal loan?
Most lenders require the following documents to assess your eligibility for a personal loan:
– Proof of income
– Proof of address
– ID proof
– Proof of business (if you are self-employed)
Can I prepay my personal loan?
A few lenders allow you to prepay or foreclose your personal loan. However, its terms and conditions vary for each lender. Ensure that you check whether a lender has such a policy and if they have any prepayment or foreclosure charges before you sign on the dotted line.